Salary.com shares lose One-Third of their value

Salary.com, Inc.  (Public, NASDAQ:SLRY) shares hit $3.88 this morning and are recovering in the $4.24 range, a lovely 32% loss since yesterday's close.  They just a reported a Q4 loss of 9 cents, which came in 1 penny lower than what the Street and we want to know if this stock is a blue light special?

Truth be told, it's more of a Red Alert. Salary.com now expects Q1 revenues of $9.3 to $9.7 million, versus the consensus of $10.23 million. Their 2008 guidance is to expect revenue of $45 to $49 million, versus $45.7 million.

(Via StreetInsider.com) Wachovia downgraded Salary.com (NASDAQ:SLRY) this morning from Outperform to Market Perform with a $6 to $8 valuation range.

Wachovia analysts said, "We are downgrading the stock due to concerns about the strategic shift away from the prior 'profitable investment' strategy to more of an 'fuel future growth by front-loading sales expense' strategy. This, coupled with the management transition, recent revenue miss, and delayed profitability suggests to us that the stock will be range-bound in the near term, until there is further clarity on these potential issues."

Needham also gave SLRY the thumbs down, thus today:

But there was some good news, during the fourth quarter, Salary.com added nearly 240 new enterprise subscribers. Over the course of 2008, Salary.com grew its enterprise customer base from over 1.8 thousand customers to nearly 2.8 thousand customers in fiscal 2008.

Total revenues for the fiscal 2008 increased 50% to $34.5 million from $23.03 million a year ago.

Wall Street analysts estimated a loss of $0.27 per share on revenues of $35.10 million for the fiscal 2008.

Commenting on the outlook, the company's founder and chief executive officer, Kent Plunkett said, "We expect these investments to allow Salary.com to grow our annual revenue to between $65 and $72 million and increase our annual operating cash flow to between $10 and $12 million by the end of fiscal 2010. Additionally, we anticipate that these investments will position us to achieve non-GAAP profitability in fiscal 2011."

Masters, again, Red Alert, they don't think they'll make money until 2011?  By that time, Kirk will be battling space creatures on a distant planet. 

Expect SLRY shares to fall to hands of swing and day traders, it is officially a risky investment.

Disclaimer: No positions in SLRY.